BaWang International (Group) Holding Limited provided earnings guidance for the six months ended June 30, 2015. The company expected that the group would incur a net operating loss of approximately RMB 88.1 million for the six months ended 30 June 2015. Despite the decrease in the sales revenue of the continuing operations in the manufacturing and sales of the household and personal care products leading to the net operating loss for the six months ended 30 June 2015 as mentioned in the Profit Warning Announcement, the Board informed the shareholders of the company and the potential investors of the company that, for the six months ended 30 June 2015, the operating expenses dropped by 43.9% as compared with the corresponding period in 2014, which alleviated the impact of the decrease in total sales by 28.7% as compared with the corresponding period in 2014. The Directors believe that the
increase in the net operating loss for the six months ended 30 June 2015 was caused by the impairment loss of assets of approximately RMB 54.4 million following a valuation of the property, plant and equipment in use in the continuing operations, by reference to their value in use.